The expected return on an equity security is comprised of a:
A)dividend yield and ROE.
B)current yield and a terminal value.
C)sustainable growth rate and a plowback yield.
D)dividend yield and a capital gains yield.

Question

Quizplus · Accepted Answer

The expected return on an equity security is comprised of two parts: dividend yield and capital gains yield. The dividend yield is the expected annual dividend payment divided by the current stock price, while the capital gains yield is the expected increase in stock price over a certain period of time. Therefore, option D, which includes dividend yield and capital gains yield, is the best choice.

The Expected Return on an Equity Security Is Comprised of A